Spending and Saving Q&A | Why not just buy a stock for the dividend, then sell it once I collect the payout?

Q: Why not just buy a stock for the dividend, then sell it once I collect the payout?

A: With many companies paying special dividends ahead of the possibility of tax increases next year, it may be tempting. But there's actually a good chance you'd lose money on the deal.

Say you buy a stock today that's due to pay a $4 dividend on Dec. 27 and sell it the next day. By Dec. 28, the dividend has been paid, making the stock worth less to you and everyone else. About $4 less to be exact.

That means the stock price will likely fall by the same amount as your payout, leaving you even. But you're not done. You'll have brokers commissions and don't forget that tax - up to 15 percent.

Louisville, Kentucky • Southern Indiana

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Spending and Saving Q&A | Why not just buy a stock for the dividend, then sell it once I collect the payout?

With many companies paying special dividends ahead of the possibility of tax increases next year, it may be tempting.